Graph of the Day: Television Makes You Poor

television-debt.jpg
Paul Kedrosky points to a graph in a report entitled The Role of Television in Household Debt: Evidence from the 1950s, where authors Matthew Baker and Lisa George concluded that "television increases the tendency to borrow for household goods and to carry debt."

And before you yell "correlation does not imply causation" note that they are "exploiting the idiosyncratic spread of television across markets, we use microdata from the Survey of Consumer Finances to test whether households with early access to television saw steeper debt increases than households with delayed access."household-debt-468.jpg

The authors started with John Kenneth Galbraith:

The process of persuading people to incur debt, and the arrangement for them to do so, are as much a part of modern production as the making of the goods and the nurturing of wants.

They concluded:

The empirical results suggest that the greater access to television is associated with a greater tendency to maintain household debt and debt for household products.

So watching TV makes you buy stuff. What a surprise.

More at Paul Kedrosky's Infectious Greed

Tags: Television

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